MEXICO CITY -- The Mexican Senate approved a new North American trade agreement on Wednesday, making Mexico the first country to ratify a deal that President Donald Trump has touted as his signature trade achievement.
The accord, known as the United States-Mexico-Canada Agreement, was signed late last year by the leaders of the three countries. It is required to be approved by the legislatures of all three countries before it goes into effect.
But the path to approval has been bumpiest in Washington -- where Democrats in Congress have raised concerns over Mexico's enforcement of labor rights and environmental law -- and smoothest in Mexico, where the president has described the accord as a guarantee of stability for his country's economy.
Mexican President Andres Manuel Lopez Obrador's enthusiasm for the agreement marks a reversal of his long-standing opposition to free trade and a turnaround for a politician who has railed against Mexico's free-market policies in the past.
The deal updates the 25-year-old North American Free Trade Agreement, which has brought the Mexican and U.S. economies closer and made Mexican factories a crucial part of American production lines.
Mexico earlier this year surpassed Canada to become the United States' largest trading partner and the largest market for American goods. About $1.7 billion in goods cross the southern border daily in both directions.
Luis de la Calle, a former Mexican trade negotiator, said the importance of that trading relationship explained the change in Lopez Obrador's attitude.
"Integration is here to stay," de la Calle said. "There are structural reasons as to why the United States and Mexico are integrated. Reversing NAFTA would have a tremendous cost."
Lopez Obrador sent the agreement to the Senate at the end of May, urging the chamber, which his left-wing party controls, to approve the deal.
"We think it suits us, that it is beneficial for more foreign investment," Lopez Obrador said then during a news conference, adding that the new trade accord would help create more well-paying jobs in Mexico.
Passage through the Senate was the final step for Mexico to approve the deal. For the treaty to be valid, all three legislatures have to approve it, and all three leaders must sign a proclamation putting it into effect, de la Calle said.
Despite Lopez Obrador's desire to see the accord take effect, Mexico's close trade relationship with the United States has also left the country vulnerable to Trump's willingness to use tariffs to get concessions on trade and on the restrictive immigration policies he wants.
Throughout Trump's time in office, Mexico has been regularly buffeted by his demands.
Trump ran against NAFTA during the 2016 campaign, threatening to tear up the deal before relenting and demanding a new trade agreement instead. As negotiations dragged on, though, he imposed tariffs on steel and aluminum imports from Canada and Mexico, among other countries.
Despite the duties, Trump, Canadian Prime Minister Justin Trudeau and Lopez Obrador's predecessor, Enrique Pena Nieto, signed the revised North American trade deal at the end of November.
De la Calle said Trump ultimately backed down on his threats against Canada and Mexico because regional trade is so important to the U.S. economy. As part of the negotiations over the new accord, both countries secured a provision that would effectively exempt them from Trump's threatened tariffs on their auto exports.
The steel and aluminum tariffs, as well as retaliatory tariffs imposed by Mexico and Canada, were lifted last month. Those retaliatory duties were designed to affect states where Trump has strong political support.
But the truce was short-lived. Trump threatened to begin imposing duties on all imports from Mexico if it did not act to halt the flow of migrant families, which have been reaching the United States' southern border at record levels.
Mexico secured a 45-day reprieve from those tariffs and has begun to crack down on the migrants, most of whom are fleeing poverty and violence in Central America. A new security force, the National Guard, as well as military troops have begun arriving at Mexico's border with Guatemala.
Business on 06/20/2019